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Stock market weekly wrap: Sensex, Nifty snap 5 straight weeks of losses; Q2 results may chart course ahead

The stock market sentiment was extremely volatile in the past week owing to various factors. (Representational photo)

Snapping a five-week losing streak, Sensex and Nifty made a comeback — gaining up to 1.5% — despite bears ruling the domestic equity markets for three out of five trading sessions during the week amid huge volatility. A respite came in the form of easing crude oil prices, a recovery in the rupee from record lows and value buying in banking, oil marketing companies and auto stocks.

The stock market sentiment was extremely volatile in the past week owing to various factors like rupee depreciating to a record low of 74.4825/$, higher crude oil prices and liquidity constraints. Persistent capital outflows from debt and equity markets by foreign portfolio investors, as well as widely negative cues from the global markets, dragged the Sensex and Nifty to a six-month low.

“Despite this (volatility), market ended the week with a gain of 1.6% led by moderation in oil prices, rebound in INR and liquidity infusion by RBI. Oil prices fell to $79.80/barrel from $85/barrel on expectation of higher output from OPEC,” said Vinod Nair, Head of Research, Geojit Financial Services. “OMCs and banking witnessed some value buying. Additionally, Q2 result season began with a strong note, with index heavyweights from IT (Tata Consultancy) and FMCG (HUL) delivered strong earnings growth,” he added.

The rupee also provided some relief after it recovered nearly 90 paise on Friday from its record low of 74.4825/$ tracking easing crude oil prices and weakness in the US dollar. “Rupee marked first weekly gains in seven weeks buoyed by the Government’s decision to raise import duties up to 20% on telecom equipment and components. It sought to reduce the dependence on imported goods in a sector with burgeoning demand, which could outstrip the value of oil imports in the coming years,” said VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

“Brent Crude which registered 4 year high of $86.74 a barrel last week has now corrected sharply to a level just above $80. The international benchmark lost nearly $6.5 a barrel, or 7%, from the high registered on 3rd October. Rupee also got relief from weaker American dollar and cooled off Treasury bond yields,” Sharma added.

What to expect next week:

Market observers suggest that the stock markets will continue to take directions from the quarterly earnings season and the developments from the government and the RBI to ease liquidity constraints. In addition, the retail inflation and IIP data released after market hours on Friday, and the wholesale inflation data to be released next week, are also expected to guide the equity markets next week.

“Since SBI announced that it will purchase the loan portfolio of NBFCs in priority and non-priority sector, some announcement or clarification of segments of those loans may come ensuring liquidity to NBFCs. Also with IL&FS new board meeting, some figures and path ahead with some action plan may come out in coming days,” Pritam Deuskar, Fund Manager, Bonanza Portfolio, told FE Online.

“Also, results of many large caps will be coming ahead giving the direction of earning trends. Oil may soften a bit for a while and so do rupee might be stable or a bit strengthening for a week,” Deuskar added.

As many as seven Nifty companies will announce their corporate results next week, namely IndusInd Bank, Indiabulls Housing, Hero MotoCorp, Infosys, Reliance Industries, UltraTech Cement and HDFC Bank.

Key takeaways this week:

Weekly gains: The Sensex surged nearly 357 points or 1.04% to close the week at

34,733.58 points. The Nifty 50 of the National Stock Exchange gained 156 points or 1.51% to end at 10,472.50 points week-on-week.

Top weekly Sensex gainers: Yes Bank    (19.64%), Kotak Mahindra Bank (11.02%), Adani Ports (7.52%), Reliance Industries (7.29%) and ONGC (6.98%).

Top weekly Sensex losers: Tata Motors (-15.31%), Tata Motors (DVR) (-13.88%), TCS (-8.78%), Vedanta (-7.61%) and Infosys (-5.93%).

FII/DII activity: Provisional data from the stock exchanges showed that foreign institutional investors sold stocks worth Rs 8,335.12 crore during the week ended October 12. Domestic institutional investors, on the other hand, purchased stocks worth Rs 8,565.38 crore.

Source: Financial Express